Choosing a benefits administration platform for your agency?There are seven criteria brokers use to compare benefits software,and we’ve covered the first four — company background,benefits-centric vs. employee-centric, funding methods andintegrations — in previous columns.

Related:

Benefits administration platform vendors:What brokers should consider

The two approaches to building a benefitssystem

Consider benefit fudning methods when choosingsoftware

Integrations -- what every brokerwants

The fifth criteria brokers should use to compare benefitsadministration platforms is the vendor’s licensing model, or howyour agency will pay for the product and what the licenseincludes.

When it comes to a license, there are four categories ofconsiderations to understand:

1. Cost: Options include a flat fee license, a minimum plus PEPMlicense, or a general agency provided license.

2. Training: Could range from no training, to phone-basedtraining, to in-person training — optional or required.

3. Ongoing support: Is there an online knowledge base? How doesphone support work? Do you have a dedicated client servicesrepresentative, or a general line? Are the build-outs completed bythe vendor, or by your agency?

4. Add-ons: These are items like 1095-Cs, onboarding, PTO, HRfeatures, and integrations.

Let’s review each of these categories in depth.

Cost

Most agencies will focus on this first. This is natural, as itrepresents hard dollars that will be coming out of your P&L.While long-term this expense should turn out to be a wonderfulinvestment in your business that pays off in a big way, at first itwill represent a hit to your income. It’s also smart to evaluatethe long-term impact if you are successful at moving the majorityof your clients online.

With that in mind, the most attractive cost model is for anagency to be able to put all of its clients on a platform for oneflat monthly or annual fee. In this model, an agency can pay $750per month and move as many clients as it wants onto the system.

Another option on the market includes a “per employee per month”fee that starts with a minimum. For example, $2 per employee permonth with a 1,000 employee minimum. In this scenario, the agencywould start out paying $2,000 per month ($2 x 1,000 employeeminimum) and then would begin to pay more than $2,000 once it addedmore than 1,000 employees to the system.

Finally, there are a few options on the market where you can geta license via one of the general agencies with which you work. Inthis model, you might not pay anything at all for the software.Long-term, though, if you believe that you need to incorporateonline benefits into your value proposition, then you’re going towant your own license and relationship directly with the softwarecompany.

Upfront training

How much training comes with the license is a big consideration.You can find options ranging from no upfront training at all torequiring that you fly somewhere for a few days of training.

When evaluating this aspect of the license, you should bear inmind that adopting online benefits technology is going to betransformative for your agency. Ultimately, it will change the wayyou do business. That change will represent huge improvements fromthe way you process renewals to how you manage adds and terms foryour clients.

If you are adopting a system for the first time, the moretraining, the better. Bear in mind that a lot of training is goingto be towards you figuring out with your team how work processeswill change within your agency, given the new improvements yoursystem is going to offer you.

Ongoing support

This is another big consideration. How technologically savvy isyour support team? Will they find some “hand-holding” to bebeneficial as they get going on the new system?

Could you use some extra back-office support when it comes tobuilding out your employer clients during the busiest time of year?It’s likely you’ll find more support to be pretty beneficial versusless.

Add-ons

Finally, it’s important to understand what is included in yourlicense and what costs extra. For example, does the system do1095-Cs? Do you have to pay extra for that, or is it included inthe license? Is electronic reporting of the 1094-C and 1095-C dataincluded or extra? How much? Is all the 1095-C work done by thesoftware company, or do they third-party a portion of it to yetanother vendor?

What about the other HR functionality? The system offers PTOtracking. Do you have to pay extra for it? If not, are you expectedto support it? If there is an extra charge for it, can the employerpay it and, if they do, will the software company support PTOdirectly with the employer?

How about COBRA? Does the software company offer COBRA, or is itintegrated with other COBRA vendors? How many? Does that have acost?

Which brings up the other big category of add-ons: integrations.Ultimately, you and your clients will want your system to beintegrated with the insurance and payroll companies. There isalmost always some sort of add-on cost for these.

For your clients that have less than 100 employees, bear in mindthat this is largely going to be a moot point. The insurancecompanies, as a general rule, can’t integrate below 100 employees.For your clients over 100 employees, make sure to ask howintegrations will work. Does the software company do these in-houseor outsource them to a third party? Is the software companyintegrated with any payroll companies? How do those integrationswork?

You’re going to want to know that the software company can dointegrations. But bear in mind that you will rarely be integratingat the same time you are implementing your new benefits softwarewith your clients. Just getting the software in place with yourclients will be your primary focus for the first year after you’veselected a system. Integrating will generally come after that withthe majority of your clients.

A final note on the license model of the system youselect

It can be easy to get lost in the weeds evaluating the abovecategories of considerations. You’ll ultimately find that there aretrade-offs among the categories. A system might be a little moreexpensive, but come with more training. Or it might have a flat feecost model, but have per employee per month fees for carrierintegrations when that comes into play for larger groups.

The bottom line is that you want to look for a licensing modelthat will allow you to implement affordably, but alsosuccessfully.

This column is adapted from the book “Online Benefits Technology: The Strategic Broker’sGuide.”